Data Center Market in US - Industry Outlook and Forecast 2020-2025

In-depth Analysis and Data-driven Insights on the Impact of COVID-19 Included

in this US Data Center Market Report

This research report on the US data center market covers sizing and forecast, share, industry trends, growth drivers, and vendor analysis. The study includes insights on the segmentation by IT Infrastructure (servers, storage, and network) Electrical Infrastructure (uninterruptible power supply (UPS) systems, generators, rack power distribution units (PDUs), transfer switches & switchgears, and other), Mechanical Infrastructure (cooling systems, racks, and Other mechanical infrastructure), Cooling Systems (CRAC & CRAH units, chiller units, cooling towers, dry coolers & condensers, and other cooling units), General Construction (building development, installation and commissioning services, building designs, physical security, data center infrastructure management (DCIM) & building management systems (BMS)), Tier Standards (Tier I and II, Tier III, and Tier IV), and Geography (Northern Eastern, South Eastern, Mid-western, South Western, and the Western US).

MARKET DYNAMICS

A few major criteria for the growth of data centers in the US are the availability of tax incentives, renewable energy sources, and reliable electricity supply. Tax incentives offered by local government agencies are factors encouraging service providers to establish new facilities in the US. Several state and local governments provide investment and sales tax incentives to attract operators. In the US, over 25 states are offering specific tax incentives for the building of new facilities, which include Virginia, Illinois, Ohio, North Carolina, Alabama, New York, Arizona, and Nebraska.  In 2019, Indiana, state legislators passed a law that exempts sales taxes on infrastructure and electricity costs for sizable data center construction. Such tax breaks can amount to the saving of $1.75−10.5 million for each qualifying Indiana-domiciled data center.  Hence, the availability of several tax incentives from regulatory agencies has been the major driver for hyperscale data center growth in the US.

Snippets  

• The outbreak of COVID-19 virus has altered the data centers construction in the US, where the opening of several new facilities is likely to be delayed by up to three months.
• The server market will continue growing during the forecast period with the increased investment in the digitalization of business operations and the development of hyperscale and colocation facilities in the US region.
• All-flash and hybrid storage arrays will dominate the storage market, thereby contributing the market growth.
• Hyperconverged platforms will gain traction to overcome the complexity of data center operations and enable fast deployment of infrastructure
• The market will witness the rise in multiple brownfield constructions, especially in North Eastern US
• The South Eastern region is likely to dominate the US data center market  
• The government’s inclination to promote data center development through land availability, reduced electricity tariffs, and the procurement of renewable energy resources will drive the US data center market growth during the forecast period

The US data center market is expected to grow at a CAGR of over 1% during the period 2019–2025. 

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US DATA CENTER MARKET: SEGMENTATION

This research report includes a detailed segmentation by IT infrastructure, electrical infrastructure, mechanical infrastructure, general construction, tier standards, and geography.

INSIGHTS BY IT INFRASTRUCTURE

The procurement of ODM servers by hyperscale operators, cloud builders, and other enterprises has offered a significant boost to the server market. Server systems based on x86 architecture dominate the US data center market. Most modern operators are adopting servers that suit their workload requirements. The demand for servers suitable for the cloud environment will continue to grow during the forecast as service providers expand their presence in the US. Servers with multicore processors and memory are expected to grow as the average number of virtual machines per physical servers continue to grow.

High-performance operations aid the growth of flash storage systems in data centers that require strong I/O capabilities. Flash arrays offer high storage performance in the virtualized data center environment. The US is the largest market for all-flash storage arrays, and it is expected to dominate for the next two years. Flash-enabled storage systems support the increase deployment of applications related to big data and AI technology. The adoption of high-performance HDDs of 10,000 and 15,000 RPM witnessed an increase in 2019.

INSIGHTS BY ELECTRICAL INFRASTRUCTURE

The adoption of modular, scalable, and lithium-ion powered systems in the facilities is expected an increment in revenue from the UPS systems segment. Several hyperscale facilities are built to support a critical power capacity of over 15 MW, which is expected to boost the data center power infrastructure procurement. Several facilities are equipped with dedicated UPS systems with a minimum of N+1 power redundancy and flexible design support 2N+1 redundant system installation. The adoption of intelligent rack PDUs supporting up to 20 kW will increase with the use of high-performance computing infrastructure in the US. Diesel generators are more likely to be adopted than any other generators such as biofuel or natural gas. Most facilities are installed with >2 MW capacity per unit. Generators are usually accepted with N+1 redundancy in the region. Also, the facilities currently comprise UPS with N+2 UPS redundancy. Switchgears are commonly adopted with N+1 or 2N redundancy and are providing diverse feed to IT rack cabinets in data centers across the region.

INSIGHTS BY MECHANICAL INFRASTRUCTURE   

Southeastern, Northeastern, Mid-Western, and some parts of Western US states support free-cooling techniques, which reduce the electricity cost by up to 30%. In other states, the operators adopt free-cooling techniques that include chillers with evaporate cooling. Leading data center development destinations such as Virginia supports up to 5,500 hours of passive free cooling methods annually, thereby reducing the adoption of chillers. Alabama and Florida support around 3,500 hours and 3,000 hours of free cooling methods, respectively. In South-Western, Texas supports up to 3,500 hours of passive free cooling methods annually, thereby reducing the use of chillers. Arizona and New Mexico, on the other side, support around 3,500 hours of free cooling methods. Several facilities in the US South Western region that utilize air-cooling chillers and CRAC units.  

Facilities in the US adopt flexible designs with a minimum of N+1 redundancy in cooling systems. Several regions of the US are driven by free-cooling solutions that are expected to increase the adoption of economizers and evaporative cooling solutions. Data centers in the region are witnessed to have adopted high-efficient indirect evaporative cooling (IDEC) units with indirect airside economizers. Operators in North Eastern use both air-cooled and water-cooled techniques.

INSIGHTS BY GENERAL CONSTRUCTION

Ashburn has become a major data center development location. DPR Construction and Jacobs Engineering Group contractor are among the major players in providing construction services in the South Eastern region. The facilities are expected to commit the 100% uptime service level agreement on network and power along with Tier III and IV standards. Several facilities can efficiently manage power, temperature, and environmental conditions via data center monitoring solutions.

Arizona and Texas in South Western have become major data center locations. The monitoring solutions enable facilities to manage power, temperature, and environmental conditions. Several facilities in Mid-Western are constructed with multi-level security cover and equipped with perimeter fencing, anti-intrusion system, dual authentication entry, biometric and color-coded key card security, and interior and exterior video surveillance. There is a growing demand for IP video surveillance systems in the market. In the Western US, operators have adopted real-time branch circuit monitoring for temperature and humidity. The country comprises both brownfield and greenfield projects. Most of the facilities will be constructed according to Tier III standards, aiming to attain LEED and the Uptime Institute certifications.

INSIGHTS BY TIER STANDARDS

Small-scale colocation facilities are likely to operate with redundancy in UPS systems and PDU devices.  A majority of underdeveloped projects in the US fall under the Tier III category. This trend is likely to continue during the forecast period, with several operators expected to shift to the Tier IV category based on the growth in rack power density and critical applications. Most new facilities are designed to be Tier III standards with a minimum of N+1 redundancy and can be reconfigured with up to 2N+1 redundancy. In 2019, over 50 new facilities were opened in the US, which were Tier III designed. Tier IV data centers are equipped with 2N+1 redundancy in the infrastructure that makes the facility fault-tolerant, with UPS systems and PDUs having 2N+2 redundancy.  

INSIGHTS BY GEOGRAPHY

Data centers in the South Eastern US are significantly contributing to the market. Overall, the Southeast US data center market witnessed around 50 projects in 2019, which is expected to be operational by June 2020. Several facilities have been developed by colocation service providers with an adaptable power redundancy that can be changed according to the customer's operational requirements.  In 2019, the Virginia market witnessed an investment of over $1 billion with the opening of several projects in the region.

Facebook and Apple have observed major investments in New Mexico, Texas, and Arizona. Arizona is found to be a noteworthy US data center market for its retail colocation, wholesale colocation, powered shell, and built-to-suit initiatives. A major reason for the growth in Texas region includes the advantage of land acquisitions, robust power grid, competitive power rates, and tax incentives.  In the South Western and Mid-Western US, there were about 25 facilities that were opened or under construction in 2019, which is likely to be operational by 2020.

Facebook and Apple are investing over $1 billion in Ohio, Nebraska, and Iowa in the hyperscale market. Illinois market is witnessing an investment of around $1 billion, followed by Ohio with over $700 million between 2019 and June 2020. In terms of tax incentives, Illinois passed a tax incentive as part of the state’s $45 billion capital construction budget that exempts qualifying data centers from state and local sales tax on the equipment inside the facilities for the next 10 years.

The Western US is expected to witness investments due to the abundance of network connectivity and affordable power. There are several contractors in the region preferring to build cutting-edge facilities. Greenfield developments are more likely to grow in the region than brownfield projects. Nevada, California, and Oregon markets attracted investments from colocation providers such as Digital Realty, CoreSite Realty, Switch, Equinix, EdgeCore, Vantage Data Center, and others.

Key Regions

• North Eastern US
• South Eastern US
• Mid-Western US
• South Western US
• Western US

KEY VENDOR ANALYSIS

Cummins and Caterpillar have a strong presence in the market. The adoption of lithium-ion batteries, fuel cell technology, natural gas generators, intelligent PDUs, and high-voltage switchgears is expected to grow significantly during the forecast period. Mechanical infrastructure comprises multiple systems that provide sufficient cooling solutions for growing rack power density. The market will witness a high competition in the US as the construction of the data center is growing, and the operators are constantly looking out for energy-efficient cooling systems with low carbon emissions. Vendors are also partnering with modular facility developers and direct liquid cooling providers to increase their revenue, and the trend is likely to continue during the forecast period.

Prominent Data Center Critical (IT) Infrastructure Providers

• Cisco
• Dell Technologies
• Hewlett Packard Enterprise (HPE)
• Huawei
• IBM
• Lenovo
• NetApp

Prominent Data Center Investors

• Apple
• AWS (Amazon Web Service)
• CyrusOne
• Compass Data Centers (Root Data Center)
• Digital Realty
• Equinix
• Facebook
• Google
• Microsoft
• NTT Communications (Ragingwire Data Centers)
• Switch
• Vantage Data Center

 Prominent Construction Contractors

• AECOM
• Corgan
• DPR Construction
• Holder Construction
• Jacobs Engineering
• Syska Hennessy Group
• Turner Construction

Prominent Support Infrastructure Providers

• ABB
• Caterpillar
• Cummins
• Eaton
• Schneider Electric
• STULZ
• Vertiv

Other Prominent Critical (IT) Infrastructure Providers  - AccelStor, Avere Systems (Microsoft), DataDirect Networks (DDN), Fujitsu, Hitachi Vantara, Infortrend Technology, Inspur, Intel, Kaminario, Micron, Mitac Holdings, Nimbus Data, Pivot3, QNAP Systems, Quanta Cloud Technology (Quanta Computer), Samsung, Seagate Technology, SK Hynix (SK Group), Super Micro Computer, Synology, Toshiba, Violin Systems, Western Digital, Wiwynn (Wistron)

Other Prominent Support Infrastructure Providers - Airedale Air Conditioning, Altima Technologies (NetZoom), Asetek, Bloom Energy, Condair Group, Cormant, Cyber Power Systems, Data Aire, Delta Group, Euro-Diesel (KINOLT), FNT, Generac Power Systems, Green Revolution Cooling (GRC), HighPower, Hitec Power Protection, KOHLER (SDMO), Legrand, Mitsubishi, MTU On Site Energy (ROLLS-ROYCE POWER SYSTEMS AG), Nlyte Software, Rittal, Trane (Ingersoll Rand), Tripp Lite, ZincFive

Other Prominent Construction Contractors - Balfour Beatty US, BlueScope Construction, Clune Construction, Fluor Corporation, Fortis Construction, Gensler, Gilbane Building Co., HDR Architecture, HITT Contracting, Hoffman Construction, JE Dunn Construction, Linesight, M+W Group, Morrison Hershfield, Mortenson Construction, Rogers-O’Brien Construction, Structure Tone, Walsh Group, Whiting-Turner Contracting

Other Prominent Data Center Investors - Aligned Energy, COPT Data Center Solutions (COPT DCS), CoreSite Realty, Cyxtera Technologies, DataBank, Data Foundry, DC Blox, EdgeCore Internet Real Estate, EdgeConnex, Flexential, Fifteenfortyseven Critical Systems Realty, GIGA Data Centers, H5 Data Centers, Iron Mountain, Quality Technology Services (QTS Realty Trust), Stream Data Center, Sabey Data Center, Stack Infrastructure, T5 Data Centers 

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KEY MARKET INSIGHTS

The report provides the following insights into the US data center market during the forecast period 2020–2025.

1. It offers comprehensive insights into current industry trends, trend forecast, and growth drivers about the market in the US.
2. The report provides the latest analysis of share, growth drivers, challenges, and investment opportunities.
3. It offers a complete overview of segments and the regional outlook of the US data center market.
4. The study offers a detailed overview of the vendor landscape, competitive analysis, and key strategies to gain competitive advantage.